While it’s true that cities in California, Florida, Nevada and Arizona dominate the worst areas fore foreclosure accounting for 37 of the 50 markets identified with the highest foreclosure rates, the surprise now is the dramatic increase of foreclosures in non-metropolitan cities.
Among the 50 metro markets with above-average foreclosure rates, the top 10 fast-growing foreclosure cities now include: Boise City-Nampa, Idaho(up 142 percent); Provo-Orem, Utah (up 120 percent); Salt Lake City, Utah (up 105 percent); Rockford Illinois (up 64 percent); Lansing-East Lansing, Michigan (up 41 percent) and; Fort Collins-Loveland, Colorado (up 28 percent).
“These are places that were on no one’s radar screen a year ago,” said Rick Sharga, senior vice president at RealtyTrac, Inc., an online foreclosure marketplace based in Irvine, California.
Radically increased housing prices driven by speculation during the boom, along with the economy and unemployment makes foreclosures in California, Florida, Nevada and Arizona expected. But alt-A interest rate re-sets and pay-option-adjustable-rate mortgage loans continue to “gradually shift the nation’s foreclosure epicenters in the third quarter away from the hot spots of the last two years and toward some metro areas that had avoided the brung of the first foreclosure wave,” said James J. Saccacio, chief executive officer of Realty Trac, in a recent press release.
Rising unemployment was also cited as a reason for foreclosures jumping 5 percent ahead of the second quarter of this year and surging 22.5 percent ahead of last year. The official unemployment rates reported by the Labor Department do not include laid-off workers who have settled for part-time work, or those who have given up looking for new jobs. When these numbers are factored in the total through September is 17 percent. “We’re really not going to see foreclosure activity get down to anything near normal until 2012,” Mr. Sharga concluded.
If you are in foreclosure or fear you soon will be, getting the right advice is crucial. You are vulnerable and a target for many scammers once the public notice of default is filed. One scam offers the delinquent homeowner the opportunity for their payments to be taken over, when in reality the Scammer rents out your house and keeps the rental income, without paying the lender and you lose your home, any equity in it and your credit is trashed. Aimee Jackson, a woman who nearly lost her home but managed to save it stated, “Run don’t walk away from anyone who claims that For $1,000.00, they can save your house. Ninety percent of the foreclosures I review have some kind of mistake in which the law firm or servicing agents were negligent. There is a lot of fraud going on.”
One family in Washington shared their story: “I fell one month behind in my mortgage payment due to lost hours at work. For $1,445 plus help with my increased winter utility cost of $565, I could have kept my home and moved on with life. However, because I didn’t have $2,010, the snowball effect has happened. I lost my home, I lost my job, and my family will soon split up. I have lost all hope!”
In most states, the process of foreclosure can take up to a year to complete. You can avoid the “snowball effect” if you are pro-active and act early in the process.
If you can make up the missing payments, fees and any legal charges, some lenders will allow you to keep your original loan. Others will insist you refinance with another lender. You can also stop the foreclosure process, at least temporarily, by filing a lawsuit or filing bankruptcy. For either legal option to work, you’ll have to come up with a payment plan to fix the deficit and you’ll incur additional legal costs. And with all legal matters, make sure you have the advice of a good attorney.
Generally, borrowers have 90 days from the notice of default to make up the deficit before the lender sends out the “notice of sale,” which sets a date for the sale of the house, usually within 15-30 days. This is the time you’ll receive notice to vacate. Depending upon your loan, even once your home is sold by the bank, the bank may be able to file suit against you for your unpaid balance of your loan.
There are more options available today than any other time. Getting the right advice before you decide on Modification, Foreclosure, Deed-in-lieu, Short sale, Bankruptcy or Forbearance, is essential. And before you decide on your particular response, make certain you check with your accountant to know how your taxes will be affected. Especially if you used your home to get cash out in the past, or the home is not owner occupied.
According to the Internal Revenue Service: “Normally, debt forgiveness results in taxable income. But under the Mortgage Forgiveness Debt Relief Act of 2007, enacted Dec. 20, taxpayers may exclude debt forgiven on their principal residence if the balance of their loan was $2 million or less. The limit is $1 million for a married person filing a separate return. Details are on Form 982 and its instructions, available now on this Web site (http://www.irs.gov/irs/article/0,,id=179073,00.html).”
“The new law contains important provisions for struggling homeowners,” said Acting IRS Commissioner Linda Stiff. “We urge people with mortgage problems to take full advantage of the valuable tax relief available.”
But above all, act swiftly because the sooner you do the better your chances of reducing your loss and financial exposure.